Nigeria’s economy to expand by 7.1% in 2012, says IMF

Nigeria’s economy will expand by 7.1 per cent this year as rising commodity prices and increased oil production help to offset a slowdown in Europe, the International Monetary Fund (IMF) has said.

The anticipated growth compares with 7.36 per cent in 2011. Nigeria had recorded a Gross Domestic Product (GDP) growth of 10.3 per cent, 10.6 per cent, 5.4 per cent, 6.2 per cent, 7 per cent, six per cent, seven per cent and 7.98 per cent in 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010.

The Fund, in its World Economic Outlook report released yesterday, noted that Nigeria, the second-largest economy in the region, will probably expand 7.1 per cent this year, while Angolan growth is set to accelerate to 9.7 per cent from 3.4 per cent

It said rising oil output in Nigeria and Angola will bolster growth in Africa’s largest crude producers.

The IMF, however, raised its growth forecast for South Africa, the region’s largest economy, to 2.7 per cent for this year from 2.5 per cent.

South Africa is more exposed to a slowdown in Europe, which buys about a third of the nation’s manufactured exports, according to the IMF. Finance Minister Pravin Gordhan, who cut this year’s growth forecast to 2.7 per cent from 3.4 per cent, said Monday the European crisis continues to threaten growth.

Further interest rate cuts may be necessary in South Africa if there’s a "protracted slowdown," the IMF said. The Central Bank has kept its benchmark interest rate at 5.5 per cent, the lowest level in more than 30 years, since November 2010 to help support the economy even as inflation exceeded the three per cent to six per cent target.

Slower growth in South Africa may undermine the outlook for the region, the IMF said.

"Adverse shocks affecting South Africa can quickly spread to neighbouring economies, through their effect on migrant workers’ incomes, trade, regional investment, and finance," the IMF said.

The Fund also said Sub-Saharan Africa’s economy will probably expand 5.4 per cent this year.

It said the growth is set to accelerate from 5.1 per cent in 2011 and compares with 5.5 per cent estimated in January.

The IMF noted that higher commodity prices and increased oil production are muting the impact of the European debt crisis, helping sub-Saharan Africa grow the fastest after Asian developing countries. African nations are also reducing their dependence on Europe, which is set to contract 0.3 per cent this year, by selling exports to other emerging markets, according to the IMF.